Wednesday, March 22, 2023

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Gold Has Declined Due To FED Decision

After the Fed’s interest rate decision, the ounce gold price fell to the lowest level in a month yesterday, with President Powell’s hawkish statements above expectations. Gram gold price, on the other hand, depreciated with the effect of the decrease in ounce gold. It is stated by experts that the steps to be taken by the Fed in economic policies and the statements of Fed officials may be effective in finding the direction of gold.

In the interest rate decision announced the previous day, the US Federal Reserve (Fed) increased 75 basis points in line with the expectations of economists. Thus, while the Fed reduced the policy rate to the range of 3.75-4.00 percent; It raised interest rates to the highest level in 14 years. While the dove expressions in the text of the bank’s decision, which was announced after the decision, reflected positively on the markets; The picture has changed with the hawkish attitude of Fed Chairman Jerome Powell. In his press release, President Powell came to the fore, stating that the final level in interest rates would be higher than previously expected. It was also critical that he said it was too early to consider stopping interest rate hikes.

Lowest Level Of A Month

After these statements by Powell, the expectation that the Fed, which is the base scenario of market actors, would raise interest rates to the level of 4.75-5.00 percent took a risk. The possibility of the Fed raising interest rates up to 5.50% has come to the table. With Powell’s post-meeting hawk statements, global stock market indices went into a selling course. While the dollar index and US bond yields rose, gold prices, which were at a premium of over 1 percent, turned negative by giving their gains. Yesterday, while the stock markets were trading in the limited negative; The dollar index rose above 113. US bond yields continued in an uptrend. The ounce price of gold fell to $ 1.616, the lowest of about 1 month.

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